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Friday, 15 July 1921

Senator PRATTEN (NEW SOUTH WALES) . - I am sure that the constant attendance of honorable senators during the whole of the proceedings on the Tariff Bill this week was due to the high level attained by the debate.. I listened with very much pleasure to various speeches made, but to none with greater pleasure than that made by the Vice-President of the Executive Council (Senator Russell) last night in moving the secondreading of the Bill. It was one of the most forcible and conclusive speeches on the subject I ever heard delivered in this Chamber. I propose addressing myself to the question of the Tariff and its incidence in various directions. This Bill is really now in operation, although it can become law only after review by another place of requests made by this Chamber and acquiescence therein. I do not regard the Tariff ,-submitted as absolutely a scientific Tariff, but it is by far the most scientific and thorough instrument for the protection of home industries ever formulated in Australia. It is not perfection, and while I hope that the deliberations of the Senate will make it more perfect than it is, we cannot look for absolute perfection in this fallible "world. I believe that most of the duties proposed are the result of very long and searching investigations, and of mature deliberation by experienced and fair minds. To my personal knowledge the Minister for Trade and Cus toms (Mr. Greene) and his officers have carefully and sympathetically considered the very numerous representations made to them by the many and varied interests concerned.

This Bill contains three schedules. The first is a British Preferential Tariff providing for substantial preference to the Mother Country. I am one of those who hold that some day reciprocal relationships will be entered into with us by the Mother Country. But British Tariff reform is not, to my mind,' a question for any Australian representative. The second schedule is an intermediate Tariff which at present does not operate, but which is included in the. schedule to the Bill, as a basis' for negotiations with sister Dominions or allied or friendly nations for the purpose of reciprocal trade with Australia. The third schedule is a general Tariff which applies to all goods imported from outside the Mother Country. These schedules, including even the first, should provide Australian manufacturers with an adequate defence against unfair competition, and by the incidence of the whole Bill should foster and encourage trade- "within the Empire as well. I .do not think there are more than one or two honorable senators who will quarrel' with the principles that the Government has laid down in the . Tariff. In " order to give Australian industries a reasonable chance to live, I am one of those who believe that the Tariff should be con: sidered from the stand-point of keeping out all goods that are made outside our borders by cheap labour, and that will come into competition with Australian labour. Unless a reasonably high Tariff is adopted, the home industries will not be able to survive the competition that apparently is looming for the world's trade. Local manufacturers should be given a fair chance to capture the whole of the home trade, and from this, amongst other stand-points, my attitude towards the Tariff will be governed.

In war time Australian manufacturers practically had the whole of the home market to themselves. They had exceedingly high artificial aid in the shape of high shipping freights, and the absence of competitive trade from overseas, but now the world is shaking down again, and it seems to me that the time has arrived when we should consider what our permanent policy with regard to local industries is going to be. Notwithstanding the artificial protection during the war, the home industries of Australia are not even yet satisfying the requirements of the Australian people in many directions. Plenty of room exists for further development, not only in the estab-' lishmemt of new industries, but in the multiplication of old ones. When local manufacturers have caught up with home requirements, and Australian industry is supplying the whole of the needs of Australia, there will be no reason why their progress should stop. This country, with few exceptions, produces every commodity and raw material needed in the whole range of the world's manufacturing activities. It has been said in the Senate, over and over again, that we have plenty of coal, and weall know that coal is the base of most important industries. Metals we have in abundance, and I think that with a good understanding between capital and labour we should, during the next . decade, see a large expansion in the exports' of Australianmanufactured goods. The point we have reached in connexion with the development of Australian industry has not been attained without some educational effort. My mind goes back to a time not very long ago. when it was almost a tradition with the ^purchasing public that nothing was any good unless it was imported, and for goods to beAustralianmade was for them to be prejudiced. My colleagues from New South Wales will, I think, indorse the statement that I now deliberately make, that thirty years ago almost anything made in Australia was anathema.

Senator de Largie - In New South Wales, yes.

Senator PRATTEN (NEW SOUTH WALES) - My honorable friend knows that that was the tradition of Free Trade in New South Wales for a considerable time. The work of educating Australian purchasers to the merits of the goods made in their own country has been going on, better articles have been produced, and improvements have been made in manufacture. I have had the great honour and privilege of being connected in some respect with this educational work, as during my tenure of office as President of the Chamber of

Manufactures of New South Wales,I inaugurated a movement called the " All Australian Manufactures Week," which I am very pleased to 'say has been of great educational value- to my fellowpurchasing Australian citizens, and has helped to advertise the fact that our own home-made, goods are the best. It can be confidently said to-day that the old tradition that nothing is any good that is not imported has gone, and in its place there is the knowledge born of actual experience that because an article is home-made it is best.

Senator Gardiner - If our own Australian goods are what the honorable senator claims them to be, does he not think they can do without a handicap of 40 per cent, on English goods?

Senator PRATTEN (NEW SOUTH WALES) - I will come to detailed arguments a little later. I wish at present, in developing one or two phases of my attitude on the Bill, to keep rather closely to my subject.

Any one who was in Sydney during the month of May, and looked around the shop windows during All-Australia manufacturers' week must have been, struck with the extensive expansion that has taken' place in Australian industries of all sorts and descriptions, and must have hoped 'that in the not distant, future Australian shop windows would be full of Australian goods, not only in one week of the fiftytwo, but for the whole of the year.

Senator Senior - And not only the shop windows, but the shop shelves.

Senator PRATTEN (NEW SOUTH WALES) - Yes. The progress of Australian manufactures during the last ten years, since we have had some Tariff assistance, has ' been phenomenal.During the period 1908-18, agriculture has increased invalue by 50 per cent.; the production of wool by 100 per cent., and the production of manufactured goods also by 100 per cent.

Senator Senior -That includes the period of very high prices.

Senator PRATTEN (NEW SOUTH WALES) - Yes ; but it includes also the period of very high prices for wool, so that the comparison, so far as manufacturing development and woolgrowing are concerned is fairly relevant. I may state, for Senator Gardiner's information, that the latest statistical figures in connexion with the manufacturing position in New South Wales show that in manufacturing industries in that State alone over 144,000 persons are employed, and are paid £21,000,000 per year in wages alone, an average for every employee, male and female, young or old, of £145 per year. In wages alone there is being paid in New South Wales to-day a sum that approximates in value to the whole of the recent phenomenal wheat crop. When it is considered that the world may have to pass, and I believe will have to pass, through a long period of more or ; less depression, it can be seen how very important our secondary industries are to the Commonwealth. The factory output of those 144,000 employees was in the region of £120,000,000, of which over £80,000,000 was for raw material, most of it produced in Australia. In listening to Senator Gardiner, whom I respect for his non-compromisingFree Trade attitude, my mind went back to twenty years ago in those so-called halcyon days ofFree Trade in New South Wales. You saw a man dressed something like this : His hat was American, his hair oil was French, his cigarette was American, the match to light it was Swedish, his collar probably was Irish, his tie was English, he occasionally drank Scotch whisky, his watch was Swiss, his underpants, perhaps, were German, his stick probably was Austrian, his socks were German, and his shoes' probably were American.

Senator Gardiner - He was a citizen of the world, anyhow.

Senator PRATTEN (NEW SOUTH WALES) - Yes, and he was probably getting 30s. per week, because we could 'not afford, to pay ^him any more owing to sending our money across the water to pay for other people to clothe him. Thanks to the very great development of Australian industries, that equipment of the average Australian man no longer obtains. It is now both economic and practicable to clothe oneself with Australian productions from head to toe, and. to be paid £5 per week.

Tariff debates in this Parliament in the past have naturally not extended very far beyond the ambit of the controversy betweenFree Trade and Protection. . This was quite natural in past years before a good many old economic theories were upset by the recent war, and Tariff debates quite rightly consisted largely of. the merits and demerits of Free. Trade or Protection. Customs duties were regarded by some as a convenient means of raising revenue, and by others solely from the stand-point of the encouragement of local industry. Some regarded Customs duties as anathema and detrimental to Australia, but there is to-day a rapidly diminishing number of persons who, by conviction, are Free Traders.

In my contribution to this debate, I desire to approach the question of whether or not this Tariff is good for Australia from a somewhat different angle. Another point of view has arisen, which is altogether " outside the question of Protection and Free Trade, as a result of the overthrow of some of the economic theories of the Victorian era. I remember that not very long ago people seriously argued that the more a' country imported, the richer it became, but, that theory has gone . overboard ' as the result of war experience. It is . common knowledge that there is very little money in the world - compared with the enormous commercial transactions going on between the people of one nation and another, and amongst themselves- and that payments and receipts as between nations for goods exchanged are not made in gold at all, but in debits and credits as the case may be.

Senator Senior - It is practically a barter.

Senator PRATTEN (NEW SOUTH WALES) - It is not quite that; and I shall show the honorable senator that, it is a question of liabilities or assets in the- form of debits or credits. Of all the hundreds of millions of pounds that Australia has borrowed in the past, we have received scarcely a single sovereign. The whole of the payments that we have obtained abroad have been made in the form of goods or services, and certainly not inmoney. The greatest war in -the world's history has cost the nations about £40,000,000,000. The proportion spent by the Allies was about two-thirds of that sum, and that spent by our enemies about one-third. I am wondering how the world is going to meet its liabilities, and how other nations are going to pay their debts. That does not immediately concern us, but we want' to know more particularly how Australia is going to meet her liabilities, and how our debts will affect our country and its prosperity.'

Before the war, Australia was a heavy debtor nation, and now our national stock-taking shows a total indebtedness, State and Federal, of about £800,000,000, two-thirds of which is owing abroad. As against that total of £800,000,000, there is only approximately about £200,000,000 of interest-earning assets. Australia is, therefore, faced with a noninterestearning debt-Federal and State - of approximately £600,000,000.

Senator Crawford - Some of that has been expended in constructing soldiers' -houses, and in placing men on the land.

Senator PRATTEN (NEW SOUTH WALES) - Possibly the honorable senator is correct. I do not think I have included in the figures given some of the assets which the Commonwealth can reasonably expect as a credit against that«debt.

Senator de Largie - What have you included ?

Senator PRATTEN (NEW SOUTH WALES) - Railways, tramways, waterworks, and such interestproducing assets.

Senator de Largie - Surely there is more than £200,000-,000.

Senator PRATTEN (NEW SOUTH WALES) - My figures are only approximate, but I think honorable senators may accept them as being substantially correct.

Senator Gardiner - They.are the New South Wales &figures.

Senator PRATTEN (NEW SOUTH WALES) - I am speaking of the whole of the Commonwealth. 'One of the assets which is placed against this huge debt is the possible indemnity that we may some day obtain from Germany, but, as far as I can see, if Germany carries out the Peace Treaty to the letter, and pays to the uttermost farthing the claims imposed upon her by virtue of that Treaty, I cannot see- how Australia's share can be more than £20,000,000 or £30,000,000 at the most. I have, therefore, not included that as a possible credit.

I desire to show how the Tariff is going to affect the public debt of Australia, and I think, on these figures,, we may assume that Australia has to-day a nonMnterest-producing debt of approximately £600,000,000. We may reasonably say that on this debt we shall, on the average, have to pay interest' approximating 5 per cent, per annum. In interest alone the permanent charge imposed upon every man, woman and child in Australia will be about £5 per head per' year, and obviously in addition to? . that, there will be liabilities for pensions, repatriation and defence, that will for some years add a considerable amount - probably another £10,000,000 - to the figures I have given. An obligation will, therefore, be imposed upon every man, woman and child in the Commonwealth to provide, on the average, £7 per head per annum to pay interest on the aftermath of war debts.

The Tariff we are now discussing will, I hope, have a vital and far-reaching effect in connexion with the relief of our non-revenue-producing indebtedness of £600,000,000, half of which is . owing overseas. I do not think we can pay this amount or attempt to reduce it very much by any foolish financial scheme such as levies on wealth, or even confiscation or repudiation.

Senator Reid - What of the new idea of a levy on capital?

Senator PRATTEN (NEW SOUTH WALES) - I have already said that we cannot hope to pay this amount by any fool-like financial schemes such as a levy on 'Capital, or confiscation or repudiation. The 'whole fabric of our financial prosperity and stability is built up on credit, and when we take the total capital wealth of the 5,500,000 people in Australia to-day as being in the region of £2,000,000,000, we must remember that this is not comprised of sovereigns or even liquid assets, as nearly half of it consists of land values, which, without use are only paper values, and a large proportion of the remainder is in bricks, mortar and machinery. Only a comparatively small portion is in the form of liquid assets and 'commodities that can. be used so that both public and private economy is absolutely necessary if we are to have financial stability and derive full benefit from our national assets. Land is of no value without use, and neither is machinery, bricks or mortar.

I propose giving close and careful attention to the items in the Tariff which we shall discuss in Committee, particularly from the standpoint of what is best to be done in connexion with stimulating Australia's balance of trade. I am glad the policy of the Government has been framed generally in the direction of giving the maximum encouragement to our citizens to produce, and to export every pound's worth of Australian products above our own requirements'. The policy of the Government, as explained by the Vice-President of the Executive Council (Senator Russell),1 is broadly in the direction of stimulating internal production as far as possible, particularly in regard to those commodities that we have previously imported, and with that policy I entirely agree. I think' our legislation should be shaped in the direction of giving as much encouragement as we possibly can to sell goods abroad, and to purchase as little as we can overseas. It : is quite obvious to me that if we

Senator Senior - It must not be forgotten that the commercial > activities of the United States were not disturbed during the war.

Senator PRATTEN (NEW SOUTH WALES) - Granted. I am speaking of the facts as they are, and pointing out that America made the fullest use of her commercial and manufacturing resources, with the result that, ultimately, we may find the hub of the financial world moving to New York. This policy is still being pursued by the United Spates, as disclosed in connexion with the recent Tariff, which has been framed on drastic lines in the direction of prohibiting imports and encouraging in every possible waysales overseas of United States manufactures. America does not want to buy. She wants to sell, all the time, even to the extent of dumping her exports.

As regards New. Zealand, speaking nationally again, the evidence shows that during the war period she placed herself in a fairly good position ; her exports exceeded imports to the extent of about - £40,000,000. Canada's excess exports during war-time really exceeded the whole of her expenditure upon the war. Australia's excess exports during the four years was only about £26,000,000, or less than 10 per cent, of our war charges, and this, again, was nullified by the recent record imports. The favorable balance of trade in the United States during the four pre-war years was more substantial than in any other country in the world, whereas Australia, in spite of. the high prices for her commodities and reasonably good trade, very little more than held her own. ' We have a large overseas trade when exports and imports are lumped together, representing about £50 per head of population. Since 1893 our exports have considerably exceeded our imports, except 'for the seven years from 1913. This is necessary if we are to pay our way, because there is aliability of £20,000,000 in regard to interest obligations and for services performed . for the Commonwealth overseas; so, if our exports do not more than balance our imports, we shall be running further' into debt. Therefore, any legislation which will diminish our purchases abroad and encourage' the development of local industry should secure our hearty indorsement, irrespective of party or fiscal beliefs.

As I have already remarked, the whole of the loan's raised outside the Commonwealth have been returned to us in goods, and goods alone. A study of the Commonwealth Statistician's figures sbfcws clearly that for the past twenty or thirty years our imports have been governed largely by loans raised in London. In other words, when no loans have been floated, the figures have shown a diminution of imports; and, on the other hand, when large loans have been placed on the market, or when there has been a. considerable period of loan activity, our imports have been heavy, increasing almost in the same ratio as the value of the loans placed abroad. If we had a large export trade, and I think this Tariff will help us to get into a favorable trade position, we should establish an excess world's credit, enabling us gradually to shift the ambit of our indebtedness to our own people, with the result that we would have then more taxable income, and consequently much more revenue from this source. The Commonwealth takes in taxation £40,000,000, and another £10,000,000 for services, and probably the direct taxation is pretty well 15 per cent, of the total incomes taxable. Graduation seems fair and reasonable, but if we could possibly by the Tariff and other measures eventually shift our outside indebtedness and owe nothing except to ourselves the load could be funded and dealt with here, and even if we then paid interest to ourselves at 6 per cent, per annum on the whole of the Federal and State non-productive indebtedness of. £400,000,000, this £24,000,000 interest we should have to pay yearly would be taxable, and in Federal direct taxation alone, if it were specially ear-marked, .would allow a sinking fund of nearly 1 per cent., which would extinguish our debts in f forty years. Therefore, I am in favour of the Tariff, because it will help us to stimulate the balance pf trade in our favour, and I think most of our legislation should have this end in view. I am not going into the question of paper money, but I may point out that a favorable balance of trade affects everything in connexion with our communal welfare. This may be seen in the currency of the United States of America, Japan, and Canada, where the balance of trade during the war period was overwhelmingly favorable, whereas in other countries where the balance of trade was in the

Q other direction, currency has depreciated almost in the same ratio.

In view of the facts which I have set out, a Customs Tariff that will stimulate local industry has my warmest support. We have been told that Australia should be self-contained and selfsupporting. I would like this country to be in the position of exporting heavily and importing, lightly. We .would then be better off, because we would be estab lishing our credit overseas from year to year, and it would have to be dealt with in the way ; I ' indicated earlier in my address. r

A great deal has been said in connexion with the incidence of the Tariff, so far as our primary producers are concerned. I do not believe it is necessary to make a mountain out df a farmer's complaint that is a molehill; neither do I desire to make a molehill out of a mountain. But I am certainly not going to forget in connexion with my attitude- towards the Tariff that, if by paying good wages in industry, we can increase value and produce in our secondary industries an extra pound's worth of Australian commodities, it is of the same value to the community as a pound's worth of wool, wheat, or sugar.

Senator de Largie - -Always, providing we can sell it overseas.

Senator PRATTEN (NEW SOUTH WALES) - No ; providing we can use it ourselves. The problem of Australia's indebtedness need not revolve around the question of reduced wages so much as around the question of honest work, and the stimulation of our primary and secondary industries. In spite of some adverse economic criticism I hold that if we want needles and anchors, this community would be infinitely, better off if it could make these needles and anchors here, because, as I have already shown, by this process we would be retaining credit which otherwise would go out of the country and be a debit against us to somebody overseas. In setting out my argument in connexion with the incidence of this Tariff, I am well aware that excessive costs of production militate against Australia's ability to sell in the overseas market; but I am convinced that the policy of this country should be to keep our national credit amongst our own people, and that if we have to go outside we should, as far as possible, keep credit - I am talking in terms of credit and r not in terms of money now - in the family. That is the policy which I am pleased to know this Tariff will encourage.

Yesterday the Vice-President of the Executive Council (Senator Russell) supplied us with some very stimulating figures in regard to the investment of capital in our secondary industries since the armistice. After all, our workmen play by far the most important part in the development of those industries. The chief source of irritation and controversy in industrial affairs is the failure ofthe various . groups to think in terms of their common interests, and to take account of the natural forces which are always in play. Nothing is fixed or certain in the business world, but there is always an automatic tendency for things to balance. Yet people sometimes urge that things must 'be taken in hand, and adjusted forthwith usually by main strength and generally to suit themselves. I believe that the natural resources of- Australia will enable us to continue to pay good wages to our workmen. Providence has helped our capital account by providing us with cheap land and a congenial . climate., The very droughts from -which we* suffer seem, in historic perspective, to be not altogether unmitigated evils. Our . natural resources, I repeat, should- insure the payment of good wages in Australia. The United States of 'America furnishes us with a very - good example of a country which is blessed with similar conditions, and which is able to pay high wages, even in competition with the world, so long as its home market is secured to its own producers. It cannot be too often stressed that we cannot simultaneously have less work, more wages, and cheap goods. But the workers of this country can reasonably expect to cash Australia's natural- resources, and thereby obtain higher wages than theworld's average.

I wish now to say a few words regarding our farmers and their position tinder this Tariff. Several honorable senators have expressed their sympathy with the man upon the land. I indorse a good deal of what they have said in that connexion, and no action of mine will be unfair to our primary producers. But. neither will the primary producer be unfair to his fellow citizens. I have taken the trouble to analyze the figures relating to the production and consumption in Australia of nearly all the products of our primary producers, and I have been gratified to learn that it can be conclusively proved by these statistics that the best market for the man upon the landis his home market.

Senator Gardiner - What is the use of talking about the home market for the farmers' wheat?

Senator Drake-Brockman - The prices of goods in the home market are governed by the world's, parity.

Senator PRATTEN (NEW SOUTH WALES) - I shall deal with that aspect of the matter presently. I repeat that the 'farmers' best market is his home market, and the bigger we can make that market, the better off he will be. Take the figures relating to the production andconsumption of quite a number of our primary products for the year 1918-19, and what do they disclose? They show that practically the whole of our production in oats, maize, barley, potatoes, sugar, cheese, and bacon, and ham, was consumed in the home market. What proportion of the total butter production of Australia did our population consume? During the year I have mentioned it consumed more than three times the total amount of butter that was exported from Australia.

Senator de Largie - It. was produced by sweated labour.

Senator PRATTEN (NEW SOUTH WALES) - I am not prepared to indorse that, interjection.

Senator de Largie -That was the finding of a Royal Commission which investigated the matter. '

Senator PRATTEN (NEW SOUTH WALES) - I sympathize with the dairy farmer, in respect. to many of the difficulties which he has to encounter, and which were so -well voiced last night by Senator Wilson. Our home market . consumedtwo-thirds of the meat produced' in- Australia during 1918-19, as well as 25 per cent, of the phenomenal wheatcrop which' was garnered last season. It' is true that our wool consumption' is, so far, almost a negligible quantity, but our home market for everything else is far and away the best market possessed by the Australian farmer. Therefore the bigger we can make that market the better it will be for him. Under the present Tariff, barley, maize, C oats, bacon, hams, cheese, butter, sugar, and eggs are all heavily protected,' and consequently the home market in these commodities is already assured to our farmers. In the discussion of this Tariff, I shall have carefully to consider whether, the ' imposition of. fair and reasonable duties upon certain commodities, with a view to fostering local industries, will bear harshly upon our primary producers. I .agree with, what same honorable senators. ha,ve said that, in regard to the main crops of wool, wheat, and meat, our farmers have largely to compete in the markets of the world. But I believe that they are prepared to give as well as to take. They merely desire fair play, and they are entitled to get it. I believe that the Minister for Trade and Customs (Mr. Greene) and his officers have studied this Tariff from almost every angle. But sincere and hard-working as they have been, I do not consider that their decisions in respect of it are necessarily sacrosanct, it will be necessary f or us to carefully scrutinize - many of the duties which have been" imposed in another place. I believe that there are anomalies which require to be rectified, and that a more scientific application of some of the preference duties, for the purpose of assisting trade within the Empire, is possible. "There axe also a few weaknesses in the Tariff caused by the taxation of the raw materials of certain industries, without -sufficient considera-; tion having been devoted to what should be the duties upon the finished articles.

There is another reason why I intend to give this Bill my general support. About two years ago the United States Congress passed what is known as the Webb law, which authorized the "formation of Trusts for the co-operative exploitation of foreign markets. Under that law, American citizens are allowed to practice in foreign countries a form of competition which, if attempted in their own, would be punishable both' by fine and imprisonment. The United States Congress also passed the .Jones Mercantile Marine Act, / under which the American Mercantile Marine can co-operate wilh the Trusts formed under the Webb law in their raid upon the trade of other countries.

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